It doesn’t take much to start a stampede these days. Rumors that a “too big to fail” bank would fail got the ball rolling and the buck ramped higher as risk aversion rose. Good economic data was unable to keep risk appetites healthy as stocks set off alarm bells. Stops below 1.6150 in Cable and 1.4250 in EUR/USD beckoned, and both have been wiped off of order boards.
Commodities (CRB -1%) and share prices are lower (S&P -1.7%) while bond yields are down as well (3.38% from 3.43% earlier). This argues for continued EUR/JPY weakness as the USD/JPY leg of the cross is undermined by lower yields and the buck benefits from the safe-haven bid. 132.15 is next support. for the cross, 1.4205 for EUR/USD.
